In a couple years, the name that will be heading the crisis is Blackrock. The worlds largest fund, with about $10 trillion in assets under management is done. This company will likely be gone by the end of the decade.
Some might be taken aback by this. After all, if Blackrock got in trouble, they would be bailed out. It is, after all, "too big to fail".
Unfortunately, for millions of people that is not the case. Blackrock going under is not going to be a welcomed sight. It is easy to be hateful towards a Wall Street institution if you ignore who has money at stake. Who are Fink's customers? In many instances, it is managing money on behalf of money managers who get it from everyday people.
Here is where the fallout is going to get nasty.
Nevertheless, we have seen the best of Larry Fink. That said, it is amazing how he got there in the first place considering his forecast on interest rates in the 1980s cost First Boston $100 million. Invested in the stock market, that would be a couple trillion today.
So what is it that is going to doom Blackrock?
It is rather simple.
$10 Trillion Time Bomb
Blackrock has $10 trillion in assets under management. This is the set up for a massive collapse.
What is Blackrock invested in? We know they went and bought a ton of single family homes over the last 5 years. Fink is also one of the people committed to rebuilding of Ukraine. All of this is going to lead to the firm's demise.
Do you know how much $10 trillion is? Many would say yes, to big to fail. That would be incorrect.
The reality is $10 trillion is too big to sell. In other words, there is no market big enough to absorb that. This is compounded by the fact that Blackrock is invested in non-liquid assets. They are also not traded very easily.
That means it is positioned for a classic bank run. We have a situation where entities will go to Blackrock for their money and it isn't there because it invested in long term positions. This is the classic equation for failure.
Liquidity and Tradability
Many focus upon liquidity. There is also the factor of tradability. This is something that gold bugs and many others overlook.
An asset might be non-liquid. If, however, it has a high degree of tradability, then liquidity can be resolved easily. One simply has to bring buyers into the market which means price cuts. This is the case for assets such as stocks or bonds. Of course, there are some that are so bad that a no bid is cemented in place. Outside those rare exceptions, something can be moved although the price will be painful.
The entire premise of the film Margin Call epitomized this. Since they were the first to market, they were even able to see stuff that was worthless because there was tradability to it.
Assets that are not tradable are ones such as real estate. Even if you drop the price to bring buyers into the market, the deal is not going to close for a couple weeks. A house is not a tradable asset in most instances.
This is why Blackrock is screwed. They own a ton of single family homes, something that is not easily moved. Then they have investments in Ukraine which cannot be unwrapped. All of this is going to put them in a liquidity crisis.
Ultimately, Blackrock's demise will be an old fashioned bank run.
Others Will Go Down Too
This will not be the only entity. We could see Fidelity and Blackstone facing similar issues. Post 2024, we could see volatility increase around the world. This often flushes people out of markets, moving towards safer regions. When money managers start to pull their funding, where do these firms get the cash from. We know they are not sitting on it.
The ideal solution would be to sell. However, if there are trillions in redemptions, how do they get out of them. We already saw Blackstone delay payouts for some REITs because it didn't have the money.
If we get a confidence collapse, which could be brought on by sovereign debt crisis in certain areas of the world, this is going to be catastrophic for these firms. There is no way to get the money required out of the investments before the markets completely collapse.
Hence, while $10 trillion sounds like it makes one powerful, it is actually a noose. There is no way to liquidate these assets when needed.
And it will lead to the demise of many of these firms. At the head of the list is Blackrock.
Posted Using InLeo Alpha
It's stuff like this is why I have shifted my focus into investing more and more into the farm, and other offline skills to diversify myself away from the markets as much as possible. I am basically using crypto and trading to build that life. Really wanting that off grid life more and more lately. Especially after getting some meat the old fashioned way. That felt good.
Too many uncertainties going on out there to do anything other than ride the waves. Armed with my new fancy custom indicator that I built and know how it works, I can get my edge to get what I need to buy more farm stuff and bullets, can't have enough of those...
At this point, I am kind of wanting to watch it all crash and burn. Let's see the true decentralized phoenixes rise from the ashes! That's why I am betting on Hive and Monero, lol.
Okay, I am on a bit of a stoned rant at this point, lol, it's been one of those days, lol. Time to get off the internet for the night, lol.
Bankers seem immune to attack in the US. They get away with it because none of them end up in jail.
Yeah, it’s gross really. The funny thing is, crypto is supposed to be the way out, but that is failing too, so where are we to turn. The whole P2P money narrative is gone and we are left with a bunch of speculative morons running the space instead of true freedom fighters.
Yeah well people foolishly were calling for Wall Street to come in back in 2017 since it would give green candles.
This is what happens, they hijack all they can.
Yep, all this ETF stuff really makes me sick. It's one of the big reasons I moved all my BTC in to Monero for the most part. I love the privacy, it's not on a bunch of centralized exchanges, mined on a CPU, and is what Bitcoin was supposed to be in my personal opinion. There will never be a Monero ETF, lol.
Wow I did not knew a company like Badrock would be so much into financial trouble going into the near future.
Few are expecting but a liquidity crisis is brewing.
I hope they go f...k up more fast possible, since this institution has simply printed most of its purchase funds for itself .
Fink is a typical banker, that is for sure.
They are behind the ESG push and made a fortune off it.
According to Blackrock, they haven't bought any single family homes: https://www.blackrock.com/corporate/newsroom/setting-the-record-straight/buying-houses-facts
They do invest in real estate though. They have approximately $60 billion invested in real estate world wide. That's 0.6% of their overall holdings. Taken in isolation, the real estate market worldwide could go to 0 and it would barely affect the value of Blackrock's portfolio.
Unless they make huge profits in crypto and change their focus? 😉
Interesting perspective, but right on the money with the illiquidity of Real Estate. I'm glad my self-directed IRA is just DCA into BTC every month!